The Nextdc Ltd (ASX: NXT) share price is under pressure on Monday.
At the time of writing, the ASX 200 data centre stock is down 5% to a 52-week low of $13.73.
This follows broad market weakness and the release of its half year results this morning.
NextDC share price falls on results day
- Net revenue up 13% to $167.8 million
- Underlying EBITDA up 3% to $105.4 million
- Capital investments of $1,003 million
- Contracted utilisation up 18% to 176MW
What happened during the half?
For the six months ended 31 December, NextDC reported a 13% increase in net revenue to $167.8 million and a 3% lift in underlying EBITDA to $105.4 million. This was underpinned by an 18% increase in contract utilisation to 176MW.
The good news is that management revealed that its forward order book currently stands at 83.0MW, which is expected to ramp into billing across FY 2025 to FY 2029, underpinning future growth in revenues and earnings.
In light of this, the ASX 200 data centre stock appears to believe that strong total shareholder returns (TSR) could be on the way for investors and wants to incentivise its management team to deliver on this.
Growth Incentive Plan
NextDC has announced a Growth Incentive Plan (GIP) for the company's CEO and managing director, Craig Scroggie, and executives. This aims to support NextDC's next phase of strategic growth that is intended to drive and reward outperformance and sustainable shareholder value creation.
The GIP is a one-off award of GIP rights with an aggregate face value of $150 million, designed to enable meaningful participation in the outperformance of returns to shareholders over a five-year period.
The full vesting of the GIP rights is subject to an absolute TSR hurdle of at least 17.5% per annum measured from the release of these results through to shortly after the release of the company's FY 2030 half year results in February 2030.
The ASX 200 data centre stock highlights that the GIP will "ensure that the Company retains and attracts high-calibre executives by providing rewards that are competitive with international and privately-owned technology and data centre peers."
How does the result compare to expectations?
Goldman Sachs has been running the rule over the result. It was pleased with the numbers provided, but highlights that NextDC's capital expenditure was well ahead of consensus estimates. This could be what is weighing on its share price today. It said:
NXT reported 1H25 Sales/EBITDA/NPAT of A$206mn/A$105mn/-A$23mn, that was +0%/-1%/+$12mn vs. GSe, with EBITDA +1% vs. VAe. Cash conversion was marginally stronger (GOCF = 88% of underlying EBITDA in 1H25, vs. 79% in 1H24), while 1H25 capex of A$995mn was ahead of GSe A$734mn, and well ahead of VAe A$548mn, with available liquidity decreasing to A$2.5bn (Jun-24 A$2.7bn).
Guidance
The ASX 200 data centre stock has reaffirmed its guidance for FY 2025. It continues to forecast net revenue of $340 million to $350 million, underlying EBITDA of $210 million to $220 million, and capex of $1,300 million to $1,500 million.
Mr Scroggie said:
NEXTDC's robust first-half performance shows that the Company is firmly on course to achieve its key revenue and underlying EBITDA targets. With continued operational momentum, we expect to deliver another strong operating and financial performance in FY25 and remain well placed to capitalise on growth opportunities and support customers' expanding needs.
